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0 sats \ 1 reply \ @Bell_curve 28 Jun 2024 \ on: Japan Fires Its Top Currency Diplomat As Yen Disintegrates econ

Due to the weak yen, several common household items have seen significant price increases:

  1. Imported food items: Prices of imported foods like beef, pork, shrimp, and produce have increased by 1.5 times or more compared to 2022-2023, making it difficult for households to maintain a healthy diet on a budget[1][3].
  2. Energy and fuel: The weak yen has led to higher power bills, as Japan relies heavily on imported energy resources like crude oil, coal, and natural gas. This has resulted in a record value of imports, further straining household budgets[1][2].
  3. Other imported goods: The prices of various imported goods, such as electronics, clothing, and other consumer products, have also risen due to the weak yen, further reducing household purchasing power[3][5].

These price increases have significantly impacted Japanese households, eroding their purchasing power and making it challenging to maintain a stable cost of living.

Sources
[1] Supply Chain Latest: A Weak Yen Hits Japanese Consumers https://www.bloomberg.com/news/newsletters/2022-04-20/supply-chain-latest-a-weak-yen-hits-japanese-consumers
[2] Weak yen stokes Japanese concern over strong rise in import prices https://asia.nikkei.com/Economy/Inflation/Weak-yen-stokes-Japanese-concern-over-strong-rise-in-import-prices
[3] Weaker yen pinches household budgets in Japan - Nikkei Asia https://asia.nikkei.com/Spotlight/Datawatch/Weaker-yen-pinches-household-budgets-in-Japan
[4] Japan concerned more about negative aspects of weak yen, finance ... https://www.reuters.com/markets/currencies/japan-concerned-more-about-negative-aspects-weak-yen-finance-minister-says-2024-05-28/
[5] Japan Faces Pressure As Weak Yen Hits Households - Finimize https://finimize.com/content/japan-faces-pressure-as-weak-yen-hits-households

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0 sats \ 0 replies \ @Bell_curve 28 Jun 2024

The Bank of Japan (BOJ) plays a key role in influencing the value of the yen:

  1. Monetary policy: The BOJ's ultra-loose monetary policy, including maintaining near-zero interest rates, has contributed to the yen's weakness against other major currencies like the US dollar. The interest rate differential between Japan and the US makes investing in US assets more attractive, putting downward pressure on the yen.
  2. Foreign exchange intervention: The BOJ buys and sells yen for foreign currencies to stabilize the exchange rate of the yen. It has intervened in the past to support the yen when it has weakened excessively.
  3. Providing yen liquidity: The BOJ provides yen liquidity to overseas account holders by accepting yen deposits, acting as a custodian for yen-denominated securities, and providing liquidation services for Japanese Government Securities (JGSs).
  4. Monitoring and analysis: The BOJ closely monitors economic and financial conditions, both domestically and globally, to assess the impact of exchange rate movements. It uses extensive research and analysis to guide its monetary policy decisions.
  5. Transparency and communication: The BOJ aims to enhance transparency by immediately releasing its monetary policy decisions, holding regular press conferences, and publishing the Summary of Opinions and minutes of its Monetary Policy Meetings.

However, the BOJ's ability to control the yen's value is limited, as exchange rates are ultimately determined by market forces. The yen's recent weakness is also driven by factors beyond the BOJ's control, such as the divergence in monetary policy between Japan and the US, and the strength of the US dollar.

Sources
[1] [PDF] Functions and Operations of the Bank of Japan https://www.boj.or.jp/en/about/outline/data/foboj10.pdf
[2] Bank of Japan (BOJ): Organization, Monetary Policy, Transparency https://www.investopedia.com/terms/b/bankofjapan.asp
[3] Japanese Companies Struggle With Weak Yen (JPY USD) https://www.bloomberg.com/news/articles/2024-05-02/japanese-companies-struggle-with-yen-s-continued-weakness
[4] Japan's yen falls to its weakest since 1990 against the dollar https://apnews.com/article/japanese-yen-dollar-currency-exchange-rate-2226ed50c429c6faf76da05bcab77c0c
[5] For Japan Inc., the weak yen may be too much of a good thing https://www.japantimes.co.jp/business/2024/05/01/economy/japan-inc-weak-yen/

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